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Wednesday, August 25, 2010

Equity Trader Alert #2010 - 49
NASDAQ Updates Select Market Maker Program Criteria Effective Wednesday, September 1, 2010

Markets Impacted:

Contact Information:

What you need to know:

  • Effective Wednesday, September 1, 2010, The NASDAQ Stock Market® (NASDAQ®) will update the criteria for the Select Market Maker Program.
  • NASDAQ will release the new Select Market Maker designations to market making firms in October 2010, based on September data.

What is the Select Market Maker Program?

The Select Market Maker Program is designed to reward market makers that step up to provide liquidity at the National Best Bid and Offer (NBBO), assuring successful price formation and market stability. A firm must be a registered market maker in the given stock to qualify.

How has the Select Market Maker criteria been updated?

The new Select Market Maker Program is designed to reward the most important factor in market stability: aggressive quoting that meets or sets the NBBO. The structure of the program has been simplified with a move from three tiers for securities to two tiers. Tier designations will be determined by Average Daily Volume (ADV) and time spent displaying order at the NBBO.

The following chart defines the updated parameters across both tiers of the Select Market Maker Program:

Tier 1
Tier 2
Securities with ADV of less than 1,000,000 shares
Securities with ADV of more than 1,000,000 shares
Anonymous and Attributable Quotes and Orders
Displayed order at the NBBO at least 15% of the time
Displayed order at the NBBO at least 10% of the time

When does NASDAQ plan to update the Select Market Maker Program criteria?

The new criteria will be implemented effective Wednesday, September 1, 2010. Select Market Maker designations based on September data using the new criteria will be available in October 2010.

Where can I find additional information?

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Nasdaq (Nasdaq: NDAQ) is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 90 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to approximately 3,900 total listings with a market value of approximately $13 trillion. To learn more, visit: business.nasdaq.com.

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